Pakistan and Russia signed an agreement to finally settle a decade old financial disagreement between the states.
Russian news agency Sputnik announced today that Russia and Pakistan have finally signed an agreement settling a decades long trade dispute on operations of the former Soviet Union. According to the agreement, Pakistan will repay the debt owed to Russia which amounts to $93.5 million.
The agreement was signed between Deputy Finance Minister Sergey Storchak and Pakistan envoy to Russia, Ambassador Qazi Khalilullah. This repayment of debt will give Russia the go-ahead to invest almost $8 million in different sectors in Pakistan including energy and steel.
Pakistan authorised it’s ambassador in Russia to sign a deal with the country back in November.
This trade dispute traces back to the Soviet era and involves $117 million. Multiple efforts have been made in the past to end the dispute but none of them have been successful. Now, Pakistan will be returning the $93.5 million it owes to Russia within 90 days of signing the agreement. In doing this, Pakistan will clear pending exporters’ debts that sum up to $23.8 million as per the settlement agreements reached in 2016-17.
The decades long dispute had an adverse effect on the relationship of the two states and the hope with it finally being resolved is that it will open doors for bilateral political, economic and diplomatic relations between the two countries.
The origin of the dispute goes back to the 1980’s when the former Soviet Union used to buy textile and other materials from Pakistan. To help facilitate this, the Soviet Union opened two bank accounts with the National Bank of Pakistan with funds being deposited into the accounts by the Economic Affairs Division through the State Bank of Pakistan.
Once the Soviet Union disintegrated, some export payments were left unpaid thus creating the trade dispute. Pakistani companies obtained stay orders in the Sindh High Court, barring the NBP from transferring funds of Russian banks held in it’s two accounts since 1996.
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